Allegion Raises Outlook as Organic Growth Accelerates
The security-products maker lifted its annual adjusted earnings forecast to as much as $9.00 a share.
Allegion plc (ALLE), a security-products maker, accelerated organic revenue growth to 6.9% in the second quarter, its strongest rate across the five quarters compared.
The growth mix broadened as both volume and price contributed, following two quarters when price increases offset declining volumes. Reported growth also accelerated from 9.7% in the first quarter and 9.3% in the fourth quarter of 2024.
Revenue rose 12.7% from a year earlier to $1.1515 billion, while adjusted earnings increased 17.6% to $2.40 a share. The earnings gain reversed a 3.2% first-quarter decline, and adjusted operating margin expanded 50 basis points to 24.2% after contracting in the prior quarter.
The Americas business drove the improvement, with reported revenue rising 11.8% and organic revenue increasing 8.9%. Both nonresidential and residential sales grew at high-single-digit organic rates, and the segment’s adjusted operating margin widened 20 basis points to 30.1%.
International organic revenue remained 1.2% below the prior year as demand weakened in core European markets, though the decline narrowed from 5.3% in the first quarter. Adjusted operating margin rebounded 440 basis points sequentially to 12.4% as production recovered from an earlier disruption tied to an enterprise-resource-planning system.
Allegion now expects 2025 reported revenue growth of 7.5% to 8.5%, up from its initial range of 5% to 7%. It projects organic growth of 3.5% to 4.5%, compared with 2% to 4% previously, and adjusted earnings of $8.85 to $9.00 a share, raised from $8.70 to $8.90.
Acquisitions and divestitures added 5.1 percentage points to second-quarter reported growth, while the currency contribution eased to 0.7 point. The quarter also included $6.9 million in restructuring and acquisition-related costs, a $3.7 million noncash pension-settlement charge and a $0.8 million impairment on a nonoperating investment.
Year-to-date available cash flow fell $14.6 million to $260.8 million, primarily due to higher receivables as revenue arrived later in the quarter. Allegion nevertheless tripled second-quarter share repurchases to about $120 million, buying 0.9 million shares.